Almost every major U.S. Stock Market Index posted an all-time intra-day high this morning, but late day selling was significant and overwhelming. To me, it really doesn't matter why today's downside reversal unfolded, but the financial media blamed normal profit-taking following a great recent advance. Trading pros may see today's late day weakness as a "sell on the news" type response to the Fed's decision to stand pat with its ultra-easy monetary policy. Again, it doesn't really matter; a major top has been posted and confirmed by my computer-based trading system.
Daily chart sell signals were triggered by my computer system at today's close in the Dow Jones Utility Average, the Nasdaq Composite Index, and the Russell 2000 Index (see Daily and Monthly Charts below). Two sector indices within the banking industry (BKX and XBD) also experienced daily chart sell signals. And several bond market trading vehicles saw sell signals (HYG, IEF, and TLT).
My strong view is that tomorrow, Thursday, October 31st, will be a fairly significant down day for the U.S. Stock Market, and that this bearish action will then trigger computer-generated weekly chart sell signals in most major indices. This combination of daily and weekly chart sell signals would represent an ominous picture for the U.S. stock market immediately ahead and over the next several months, at least.
In the interest of full disclosure, I am long the S&P 500 "Double Short" ETF (symbol SDS) within my more aggressive managed accounts.
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| Russell 2000 Daily Bar Chart with Computer-generated Buy & Sell Signals |
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| Russell 2000 Monthly Bar Chart with Computer-generated Buy & Sell Signals |
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